AEMC and Rule changes
Presentation to AEMO Gas Wholesale Consultative Forum
Kamlesh Khelawan
Director
This presentation does not represent legal advice or the views of the
Commissioners
AEMO offices, Melbourne
AEMC
22 September 2009
Presentation to GWCF
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Contents
• About AEMC
• Subject matter for National Gas Rules
• Rule making test
• Procedure for making Rules
• Contents of Rule change proposal
• Contacts at AEMC
AEMC
Presentation to GWCF
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AEMC’s functions and powers
• AEMC Establishment Act 2004
• Rule making functions and powers under NEL/NGL and Regulations
• Market development functions under NEL/NGL and the Rules
• Provision of advice to the MCE as requested by the MCE
• Other functions conferred under National and Jurisdictional Energy
Laws or any other Law
• AEMC’s decisions are subject to judicial review
– must pertain to matters that AEMC may make Rule on, meet the
Rule making test and comply with the Rule making procedures
AEMC
Presentation to GWCF
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Subject matter for National Gas Rules (s 74)
•
AEMC may only make Rules regulating
– access to pipeline services
– the provision of pipeline services
– the collection, use, disclosure, copying, recording, management
and publication of information in relation to natural gas services
– the operation of a regulated retail gas market
– AEMO’s declared system functions and the operation of a
declared wholesale gas market
– the activities of Registered participants, users, end users and
other persons in a regulated gas market
– the safety, security and reliability of pipelines
• Any matter or thing contemplated by NGL, or necessary or
expedient for the purposes of NGL.
• Further details in Schedule 1 of the National Gas Law
AEMC
Presentation to GWCF
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Rule making test under the Law
• Refer Chapter 9, Part 1, Division 2 of the NGL.
• AEMC:
– may only make a Rule if it is satisfied that the Rule will or is likely
to contribute to the achievement of the national gas objective
(NGO)
• may give weight to any aspect of the NGO, as it considers
appropriate
– must have regard to the MCE statements of policy principles
– take into account form of regulation factors
– take into account revenue and pricing principles
AEMC
Presentation to GWCF
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Initiation of a Rule change for declared gas market
•
•
•
Request for Rule regulating a declared wholesale gas market may only be
made by:
– AEMO or
– Minister of adoptive jurisdiction
Request for Rule regulating the declared system functions may only be
made by:
– AEMO, or
– Service provider for a declared transmission system who is a party to a
service envelope agreement with AEMO, or
– Minister of adoptive jurisdiction
AEMC may only make Rule that affects allocation of powers, functions and
duties between AEMO and service providers for a declared transmission
system if:
– AEMO consents, or
– Rule is requested by the Minister
AEMC
Presentation to GWCF
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Procedure for making a Rule by the AEMC
• Refer Chapter 9, Part 3 of NGL
Generally four stages – standard procedure
• Initial assessment of a Rule change proposal
• First round public consultation on a proposed Rule change
• Draft Rule determination and second round public consultation on
Rule or more preferable Rule
• Final rule determination – Rule or more preferable Rule
AEMC
Presentation to GWCF
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Rule change process - timeline
Min. 6 weeks
Max. 6 weeks
Draft
determination
Second
round
submissions
Final
determination
First round
submissions
Min. 4 weeks
Max. 6 weeks
AEMC may extend time if request
raises complex or difficult issues
or in event of material change to
circumstances
Final Rule
Decision on
initial review
of proposal
As soon as practicable
AEMC
Presentation to GWCF
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Expedited and fast track Rule change
• AEMC may expedite a Rule change proposal if it considers it is a:
– non-controversial rule (unlikely to have a significant effect on
market for gas or the regulation of pipeline services)
– urgent rule (if not made with urgency would prejudice or
threaten supply of gas)
– 2 weeks for objection, 6 weeks to make Rule from date of notice
• AEMC may fast track a Rule if:
– prior public consultation has been undertaken by a gas market
regulatory body (eg. AEMO, AER)
– request is based on MCE directed or AEMC initiated review
AEMC
Presentation to GWCF
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Rule change process – fast track
Min. 6 weeks
Max. 5 weeks
Draft
determination
Second
round
submissions
Max. 6 weeks
Final
determination
AEMC
decides to
fast track
AEMC may extend time if request
raises complex or difficult issues
or in event of material change to
circumstances
Final Rule
Decision on
initial review
of proposal
As soon as practicable
AEMC
Presentation to GWCF
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Consultation by regulatory body for fast track
•
The gas market regulatory body must have consulted with public on nature and
content of request
•
In AEMC’s view, consultation conducted by the gas market regulatory body was
adequate having regard to:
•
– nature and content of the Rule, and
– the kind of consultation conducted
Under the fast track Rule change, the AEMC would not undertake the first round
public consultation and prepare a draft Rule determination
•
Example:
•
– Rules arising from Reviews that are subject to public consultation
Proceeding with a Rule change request under the fast track process where
appropriate consultation has not been undertaken:
– AEMC will not have met its obligations under the Law; and
– substantive issues may be raised as part of AEMC’s consultations, delaying the
making of the Rule
AEMC
Presentation to GWCF
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Contents of a Rule change request to AEMC
• Clause 13 of National Gas Regulations
– the name and address of the person making the request
– description of the Rule that the person proposes be made
– a statement of the nature and scope of the issue that is proposed to be
addressed and an explanation of how the proposed Rule would address
the issue
– an explanation of how the proposed Rule will or is likely to contribute to
the achievement of the national gas objective
– an explanation of the expected benefits and costs of the proposed
change and the potential impacts of the change on those likely to be
affected
– in the case of a request by a gas market regulatory body for a fast track
Rule change - a summary of the consultation conducted by the gas
market regulatory body, including information about the extent of the
consultation and about the issues raised during the consultation and the
gas market regulatory body's response to those issues
AEMC
Presentation to GWCF
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Contents of a Rule change request to AEMO
• Division 8, r 356, of the Declared Wholesale Market
Rules
– the name and address of the person making the request
– must include statement of reasons:
• necessary and desirable
• consistent with the national gas objective
• compatible with proper performance of AEMO’s declared
system functions
• technically, operationally and economically feasible
• AEMO would need to consult on matters that the AEMC would be
required to take into account under the NGL
AEMC
Presentation to GWCF
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Contacts
Kamlesh Khelawan
Director
Australian Energy Market Commission
(02) 8296 7844
[email protected]
Australian Energy Market Commission
Office address:
Level 5
201 Elizabeth Street
Sydney NSW 2000
Telephone:
(02) 8296 7800
Postal address:
PO Box A2449
Sydney South NSW 1235
Facsimile:
(02) 8296 7899
http://www.aemc.gov.au
AEMC
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AEMC
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